-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AvEOqe3kuPPkjqfdYmY/SRDENv1Wjmxtu70gcmm7GdFNHpgHza5ltJRSvH6wk+nN cBi0NxeNzG5foaz8bGZs+g== 0001012870-97-000960.txt : 19970512 0001012870-97-000960.hdr.sgml : 19970512 ACCESSION NUMBER: 0001012870-97-000960 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANOMETRICS INC CENTRAL INDEX KEY: 0000704532 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 942276314 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13470 FILM NUMBER: 97599077 BUSINESS ADDRESS: STREET 1: 310 DEGUIGNE DR CITY: SUNNYVALE STATE: CA ZIP: 94086 BUSINESS PHONE: 4087461600 MAIL ADDRESS: STREET 1: 310 DEGUIGNE DRIVE CITY: SUNNYVALE STATE: CA ZIP: 94086 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR -------------- [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO _______________ COMMISSION FILE NUMBER 0-13470 --------------------------------------------------- NANOMETRICS INCORPORATED - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 94-2276314 - ----------------------------------- --------------------------------- (STATE OR OTHER JURISDICTION OF (I. R. S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 310 DEGUIGNE DRIVE, SUNNYVALE, CA 94086 - ----------------------------------- --------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (408) 746-1600 -------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------- ------- At April 14, 1997 there were 8,277,107 shares of common stock, no par value, issued and outstanding. NANOMETRICS INCORPORATED INDEX
Part I. Financial Information Page ---- Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1997 (unaudited) and December 31, 1996....................................... 3 Consolidated Statements of Income - Three months ended March 31, 1997 and 1996 (unaudited).................................................................... 4 Consolidated Statements of Cash Flows - Three months ended March 31, 1997 and 1996 (unaudited).................................................................... 5 Notes to Consolidated Financial Statements.............................................................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations .......................................... 7 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K ........................................................... 9 Signatures ........................................................................................... 10
2 PART I: FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS NANOMETRICS INCORPORATED CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
March 31, 1997 December 31, ASSETS (unaudited) 1996 ----------- ------------- CURRENT ASSETS: Cash and equivalents $ 1,969 $ 1,725 Short-term investments 7,639 6,657 Accounts receivable, less allowance for doubtful accounts of $415 and $419 9,919 11,100 Inventories 5,556 5,078 Deferred income taxes 1,731 1,648 Prepaid expenses and other 614 882 ------- ------- Total current assets 27,428 27,090 PROPERTY, PLANT AND EQUIPMENT, Net 2,406 2,600 OTHER ASSETS 265 274 ------- ------- TOTAL $30,099 $29,964 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,576 $ 1,563 Accrued payroll and related expenses 616 533 Other current liabilities 864 763 Income taxes payable 548 1,271 Current portion of long-term debt 322 347 ------- ------- Total current liabilities 3,926 4,477 LONG-TERM DEBT, Net of current portion 2,978 3,296 DEFERRED INCOME TAXES 30 131 ------- ------- Total liabilities 6,934 7,904 ------- ------- SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; 8,262,558 and 8,258,061 outstanding 11,844 11,833 Retained earnings 11,661 10,387 Accumulated translation adjustment (340) (160) ------- ------- Total shareholders' equity 23,165 22,060 ------- ------- TOTAL $30,099 $29,964 ======= =======
See Notes to Consolidated Financial Statements 3 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
Three Months Ended March 31, 1997 1996 ------ ------ NET REVENUES: Product sales $7,301 $5,554 Service 958 1,514 ------ ------ Total net revenues 8,259 7,068 ------ ------ COSTS AND EXPENSES: Cost of product sales 2,737 2,369 Cost of service 863 1,003 Research and development 674 670 Selling 1,263 1,011 General and administrative 636 570 ------ ------ Total costs and expenses 6,173 5,623 ------ ------ OPERATING INCOME 2,086 1,445 OTHER INCOME, NET 79 72 ------ ------ INCOME BEFORE PROVISION FOR INCOME TAXES 2,165 1,517 PROVISION FOR INCOME TAXES 892 683 ------ ------ NET INCOME $1,274 $ 834 ====== ====== NET INCOME PER COMMON AND EQUIVALENT SHARE $ 0.15 $ 0.10 ====== ====== COMMON AND EQUIVALENT SHARES USED IN PER SHARE COMPUTATION 8,673 8,551 ====== ======
See Notes to Consolidated Financial Statements 4 NANOMETRICS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Three Months Ended March 31 1997 1996 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,274 $ 834 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 77 72 Deferred taxes (460) 495 Changes in assets and liabilities: Accounts receivable 90 (468) Other receivables (48) (64) Inventories (274) (387) Prepaid expenses and other (25) (245) Accounts payable and other liabilities 254 119 Income taxes payable (724) (278) ------- ------- Net cash provided by operating activities 164 78 ------- ------- INVESTING ACTIVITIES: Purchase of short-term investments (2,940) (1,185) Sales/maturities of short-term investments 1,958 890 Capital expenditures (47) (18) ------- ------- Net cash used in investing activities (1,029) (313) ------- ------- FINANCING ACTIVITIES: Repayments of long-term debt (81) (492) Issuance of common stock 11 70 ------- ------- Net cash used in financing activities (70) (422) ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,179 (25) ------- ------- NET CHANGE IN CASH AND EQUIVALENTS 244 (682) CASH AND EQUIVALENTS, at beginning of period 1,725 3,625 ------- ------- CASH AND EQUIVALENTS, at end of period $ 1,969 $ 2,943 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 25 $ 31 ======= ======= Cash paid for income taxes $ 1,622 $ 392 ======= =======
See Notes to Consolidated Financial Statements 5 NANOMETRICS INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Consolidated Financial Statements The consolidated financial statements include the accounts of Nanometrics Incorporated and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. While the quarterly financial information is unaudited, the financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for a fair presentation of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The operating results for interim periods are not necessarily indicative of the operating results that may be expected for the entire year. The information included in this report should be read in conjunction with the information included in the Company's 1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Note 2. Per Share Information Net income per share is based on the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares include dilutive common stock options (using the treasury stock method) and shares subscribed under the Employee Stock Purchase Plan. Note 3. Inventories Inventories are stated at the lower of cost (first-in,first-out) or market and consist of the following (in thousands): March 31, December 31, 1997 1996 ------- -------- Raw materials and subassemblies $3,173 $1,855 Work in process 1,786 1,414 Finished goods 597 1,809 ------ ------ $5,556 $5,078 ====== ====== Note 4. Recently Issued Accounting Standard In February 1997, the Financial Accounting Standards Board issued a Statement of Financial Accounting Standards No. 128, "Earning per Share" (SFAS 128). The Company is required to adopt SFAS 128 in the first quarter of fiscal 1997 and will restate at that time earnings per share (EPS) data for prior periods to conform with SFAS 128. Earlier application is not permitted. SFAS 128 replaces current EPS reporting requirements and requires a dual presentation of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing net income by the weighted average of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. If SFAS 128 had been in effect during the current and prior year periods, basic EPS would have been $ 0.15 and $ 0.11 for the quarters ended March 31, 1997 and 1996, respectively, and $ 0.15 and $ 0.11 for the year to date periods, respectively. Diluted EPS under SFAS 128 would not have been significantly different than primary EPS currently reported for the periods. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- Total net revenues for the first quarter of 1997 were $8,259,000, an increase of $1,191,000 or 17% from the same quarter in 1996. Product sales of $7,301,000 increased $1,747,000 or 31% for the first quarter of 1997 compared to the same period in 1996 resulting from increased demand for the Company's automated products especially from customers in the U.S. and Taiwan. Service revenue of $958,000 decreased $556,000 or 37% for the first quarter of 1997 compared to the same period in 1996. This decrease in service revenue is primarily attributable to decreased sales of accessories in the U.S. and the Far East in 1997. The Company believes that its revenue growth for the three months ended March 31, 1997 is not necessarily indicative of future results. Cost of product sales as a percentage of product sales decreased to 37% in the first quarter of 1997 from 43% in the first quarter of 1996. This improved cost of product sales ratio resulted primarily from higher sales volumes resulting in lower per unit manufacturing costs. Cost of service as a percentage of service revenue increased to 90% in the first quarter of 1997 from 66% in the first quarter of 1996. This increase was primarily attributable to the decline in the sales of accessories while fixed service costs were relatively constant in the first quarter of 1997. Research and development expenses for the first quarter of 1997 increased $4,000 or 1% compared to the same period in 1996. This increase was mainly due to higher costs associated with new product development which was partially offset by the impact of the strengthening of the U.S. dollar against the Japanese yen on engineering expenditures in Japan. Selling expenses for the first quarter of 1997 increased by $252,000 or 25% compared to the same period in 1996 primarily because of the addition of sales and marketing staff in the second half of 1996. General and administrative expenses for the first quarter of 1997 increased by $66,000 or 12% primarily as a result of spending associated with increased operating activity. Other income increased $7,000 or 10% during the first quarter of 1997 compared to the same period in 1996 due primarily to higher interest income in 1997, resulting from higher average levels of cash and short-term investments. The Company's effective tax rate decreased to 41.2% in the first quarter of 1997 from 45.0% in the first quarter of 1996 primarily due to proportionately higher income in lower tax jurisdictions. The Company reported an operating income of $2,086,000 and net income of $1,274,000 for the first quarter of 1997 compared to an operating income of $1,445,000 and net income of $834,000 for the same period in 1996. During each quarter, the Company sells a relatively small number of systems, and therefore a slight change in the timing of shipments can have a significant impact on quarterly results of operations. The Company's backlog at the beginning of each quarter generally does not include all systems sales needed to achieve expected revenues for that quarter. Consequently, the Company is often dependent on obtaining orders for systems to be shipped in the same quarter that the order is received. Moreover, customers may reschedule shipments, and production difficulties could delay shipments. Accordingly, the Company's results of operations are subject to significant variability from quarter to quarter and could be adversely affected for a particular quarter if shipments for that quarter were lower than anticipated. Because a relatively small group of customers may account for a significant percentage of the Company's sales in any given period, the loss of any single customer could have a short-term adverse effect on the Company's results of operations. 7 Liquidity and Capital Resources - ------------------------------- At March 31, 1997, the Company had working capital of $23,502,000 compared to $22,613,000 at December 31, 1996. The current ratio at March 31, 1997 was 7.0 to 1. The Company believes working capital including cash and short-term investments of $9,608,000 will be sufficient to meet its needs at least through the next twelve months. Operating activities for the first three months of 1997 provided cash of $164,000 primarily from net income offset to some extent by the payment of income taxes, while the purchase of short-term investments net of sales/maturities used $982,000, capital expenditures used $47,000, debt repayment used $81,000 and issuance of common stock provided $11,000. The foregoing Management Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties as set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Risk Factors" in the 1996 Annual Report on Form 10-K. The Company's actual results could differ materially from the results anticipated in such forward-looking statements. 8 NANOMETRICS INCORPORATED PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A. Exhibits EX27 - Financial Data Schedule B. Reports on Form 8-K. None. 9 NANOMETRICS INCORPORATED SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NANOMETRICS INCORPORATED (Registrant) /s/ Vincent J. Coates - ------------------------------------ Vincent J. Coates Chairman and Chief Executive Officer /s/ Paul B. Nolan - ------------------------------------ Paul B. Nolan Chief Financial Officer Dated: May 9, 1997 10 EX-27 2 LETTER OF TRANSMITTAL
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1,969 7,639 10,334 415 5,556 27,428 2,406 0 30,099 3,926 2,978 0 0 11,844 11,321 30,099 7,301 8,259 2,737 3,600 2,573 0 0 2,165 892 1,274 0 0 0 1,274 .15 .15
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